FMC CORP Q4 FY2024 earnings call

• Restructuring program exceeded targets, with net savings of $165 million in 2024 and run-rate savings over $250 million by end of 2025.
• Focus on core vs growth portfolio: Core includes legacy products with expiring patents; growth includes Cyazypyr, new active ingredients (fluindapyr, Isoflex, Dodhylex, rimisoxafen), and plant health. Plant health expected to grow mid-20% range to 2027.
• Actions to reduce channel inventory, implement diamide strategy, and expand sales organization, particularly in LATAM and EMEA.
• Manufacturing cost reductions for Rynaxypyr and Cyazypyr, but impacting short-term revenue.

Fourth quarter revenue was $1.22 billion, below guidance range, growing 7% vs 2023 (9% excluding GSS divestiture). Over 75% of growth came from the growth portfolio, including new active ingredients and Plant Health (which grew 33%). LATAM sales were disappointing due to high competition and credit risks. Full-year 2024 sales declined 5% but EBITDA was $339 million, 33% higher than 2023, with an EBITDA margin of 27.7% in Q4.

• 2025 full-year sales expected $4.15B-$4.35B, EBITDA $870M-$950M. Q1 sales expected $750M-$800M, EBITDA $105M-$125M.
• 2027 targets: growth portfolio to contribute 30% of sales, total sales ~$5.2B, EBITDA ~$1.2B (23% margin). Growth portfolio sales to reach $600M by 2027, plant health growth mid-20% range with pheromones potentially accelerating post-2027.

• High channel inventory levels in certain regions (LATAM, Asia, Canada, Eastern Europe).
• Distribution channel changes in LATAM due to consolidation, requiring investment in new routes to market.
• Competition leading to unfavorable pricing and terms, particularly in LATAM.
• FX headwinds impacting revenue and EBITDA.
• Patent expirations and generic competition affecting Rynaxypyr's market position.

Q: Vincent Andrews asked about Rynaxypyr's evolution from 2026 and beyond, seeking details on volume, price, and managing price gaps as generics proliferate.

A: Pierre Brondeau responded that FMC can compete with generics, plans to expand market reach with lower-cost solo molecules and differentiated high-end formulations via new mixtures.

Q: Josh Spector inquired about volume guidance for 2025, noting the near-term outlook and volume growth expectations.

A: Pierre Brondeau explained that volume growth is driven by new products and new customers, focusing on reducing channel inventory, with growth portfolio contributing 75% of the ~$250M-$350M volume growth.

Q: Chris Parkinson asked about confidence in hitting 2025 guidance after Q1, particularly for the second half.

A: Pierre Brondeau and Andrew Sandifer responded that the first half addresses channel inventory issues, with new products and routes to market in LATAM and EMEA driving growth in the second half.

Q: Richard Garchitorena touched on pricing outlook, specifically cost-plus contract adjustments and pricing in Latin-America.

A: Pierre Brondeau stated that cost-plus contract adjustments are significant, with about two-thirds of price decline from these contracts, and Latin-America faces high competition and unfavorable pricing terms.

Q: Arun Viswanathan asked about inventory management learnings and efforts to handle channel inventory.

A: Pierre Brondeau mentioned aggressive actions in the first half to address high inventory in specific countries like India, Brazil, and Eastern Europe, targeting a lower inventory level.

Q: Ben Theurer inquired about the cadence of growth from 2025 to 2027.

A: Pierre Brondeau responded that growth will be evenly distributed, with significant acceleration from 2026 to 2027 due to a correction year and full growth of the growth portfolio.

Q: Steve Byrne asked about Rynaxypyr volumes in 2025 and global market outlook.

A: Pierre Brondeau noted Rynaxypyr expected to decline in 2025, but anticipates high single-digit growth from 2026 due to expanded market reach via new formulations and mixtures.

Q: Frank Mitsch asked about price declines and the impact of manufacturing process improvements on diamide partners.

A: Pierre Brondeau explained that cost-plus contracts with diamide partners result in price adjustments as manufacturing costs improve, with two-thirds of price decline in 2025 coming from these contracts.

Q: Mike Harrison inquired about the Latin America distribution channel changes and investment in new routes to market.

A: Andrew Sandifer responded that LATAM's distribution channel has consolidated, requiring investment in new routes to market, focusing on direct grower relationships with new technologies like fluindapyr.

Q: Kevin McCarthy asked about EBITDA guidance and headwinds causing flat EBITDA.

A: Pierre Brondeau stated that headwinds include price declines from diamide partners, FX, and investments in new sales organization, totaling ~$200M-$250M in headwinds.